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Dave Ramsey explains his process for investing in Mutual Funds

In this article I am going to share with you a simple, proven strategy to invest in
mutual funds and out perform the S&P 500. 

 

This is my my proven investing process, “philosophy” if you will ,as it relates to Mutual
Funds and my recommendations for newbie investors or millionaire who choose to invest
in mutual funds.

 

When it comes to investing I hear people make the same two excuses over and over.  They
say well nobody can beat the market, I’m just going to invest in index funds. I read a book and
I read an article on the internet so that is what I am gong to do.  ( Now everything on the
internet is true ???? )  Abraham Lincoln said that. Think about it it’ll come to you later.

 

The other excuse, is that people say well you can’t beat the market, and investing is too
complicated. I mean, investing is intimidating. Investment people are intimidating. I feel
two inches tall when I talk about investing. It’s intimidating, etc. etc.

 

Well, um, the second one is true it investing can talking with financial planners, can be
intimidating, but it shouldn’t be it’s really not that complicated. And, when you sit down
with someone that actually knows what the flip they’re doing they can help you put the
cookies on the shelf where you can reach them.

 

There are resources available for us like saveyourbucks.com, but let’s face it for most
people it is easier to be lazy than take the time to become self-educated.  Thankfully
not you, you are here and you are reading this article so congratulations!

 

You will see some of the best business and financial experts on the planet represented
here at saveyourbucks.com, as well as passionate newbies who have a message to share
with the world.  

 


There is really not a lot to understand about mutual funds,. Like most things and people
in life, you just need to understand  their track record of the mutual fund and, that’s
how I started investing, many years ago.

 

Now, I know there’s a lot of people that have opinions about my investment advice but
I do have millions & millions of dollars in mutual funds. I wonder how that got there?
It must have been that I understood something about t mutual funds, right?  That
money just didn’t appear there, I haven’t hit the lottery. I was bankrupt at 28 years
old. I’m 57 now , so what happened during that 30-year period of time?

 

Well I used the investment principles that I have taught in countless articles and radio
show episodes.  I don’t tell you to do something and then go do something different. I
do what I tell you to do. Oh, and by the way it has worked for me and lots of others.

Lots of millionaires calling in on the millionaire theme hours say “Dave I got out of debt.
I loaded up my 401k with the four types of mutual funds you talk about. I loaded up my
Roth IRA with four types of mutual funds, and here I am 20 years later and I’m a
millionaire. Thank you.”

And I get that all the time.  Most people would be shocked how many millionaires live
within a few miles of where they live.  I don’t know why when it comes to financial
matters, and especially Mutual Fund investing, people seem to want to make it harder
than it actually is.

 

So based upon TRACK RECORD, apparently the stuff we’re teaching works: and it’s
not that complicated. And my mutual fund groupings have beat the market year after
year!  It is simple; You just pick mutual funds that have outperformed the S&P; it’s
really not rocket science. Not all of them have outperformed the S&P. A lot of them
haven’t. Over half haven’t; but don’t pick one that didn’t.  So can you do basic research
and find mutual funds that have a track record of out performing the S&P

 

Many people treat Mutual Fund Selection, like they are sitting at the racetrack and
are going to bet on horses. I don’t bet on horses just because I don’t know anything
about it and I don’t gamble because I don’t like losing money.

 

I work too hard for my money.  So…. but if you’re saying …I went to a dog track one time
or a horse track one time when I was a youngster; and someone tells you, you know this
horse has not won a race ………. ever! So, bet on that one stupid.

 

You know, this horse won the last three races oh, I probably might bet on him. You
know, that’s all you’re doing when you’re picking a mutual fund. Did it beat the
market? If it didn’t beat the market then don’t pick that mutual fund. That’s not
rocket science. That horse hadn’t won a race. Don’t bet on that horse.

 

Why is Investing in Mutual Funds hard?

 

People think not making smart decisions doesn’t hurt anything.  Leaving well enough
alone is never a good idea.  At some point your lack of action will bite you in the butt.

 

It’s not hard; and this idea that you have to do what’s called passive investing and surrender and say, “oh well you really can’t beat the S&P; Dave Ramsey doesn’t know what he’s talking about”; oh well I don’t know, I mean I pulled up my stuff the other day and looked at it let’s see anything I got written down here. Just because I don’t have it all memorize. Let’s see here; um, aww, the mutual funds I’m personally invested in the four types I talked about over the last 40 years I’ve averaged 0,02 percent.   And on and on and on people over overwhelmed with laziness and indecision. 

 

 

I am so tired of hearing,  You can’t get 12% on your money!  I know, I got 13% okay and
the S&P during that time averaged 11.81 percent which is real close to 12 stupid people.

Thirty-year my investments of averaged 11.3, the S&P is averaged 10.89. So, I’ve outperformed
the S&P over the past 30 and 40 year peiods.  Outperformed the S&P on the 20. On the
10-year outperformed the S&P. Huh, go figure!   Of course I have, and you can as well.

Stop trying to make the simple complicated!

I understand the goal of some mutual fund sales people is to create confusion, but if
you are regular reader of SAVE YOUR BUCKS,  I hope you are beyond that.

 

So, can you consistently outperform the S&P?   Do what I do.   I pick four mutual funds
that outperformed the S&P. I picked horses that won the race. I mean; what? You look
down to the track record and it’s got a little chart in there. It’s got the S&P in one line
and if your mutual fund you’re looking at lines not above the S&P on one line on the chart,
you’re looking at the wrong one. Pick you another one. Why would you bet on a horse that
hadn’t ever won a race? This is really not rocket science people. I mean, think about it.
It’ll come to you. ………Wow.

One of the problems we are all facing today is we have access to too much information.
It seems like as information increases, common sense diminishes.   It is certainly not
the Internets fault, but sometimes it seems that way.

I think the fundamental two problems are laziness, and people have not idea how to look at a person or companies, track record and figure out if this is someone they should be listening to.

Just because you like the color of her eyes is not reason to listen to her if her track record is not obvious.

But then along comes the internet and lies to you and you can’t do that; oh really? Okay, maybe you can’t, but I can, and I have and it’s resulted in millions and millions and millions of dollars.  Lots of millions by the way. It’s worked out good. I’m having a good time ya’ll. Life is good.

You know people that retired wealthy it wasn’t an accident. They didn’t get to wealth, they
get to retirement and go; “how that happened? Where that come from?”

They’re not surprised.

They know exactly where that money came from. It was an intentional act year after year,
month after month, paycheck after paycheck being deducted into their 401k, into the Roth
IRA, into good mutual funds year after year after year after year after year after year it’s
just not sexy. It’s not a fish story to tell on the golf course! it’s just the tortoise.

 

He just keeps walking. He’s ugly. Just keeps walking. He’s ugly and nobody notices him. But
hey, that’s the tried and true, proven way to  become a millionaire. What all the data
points tell us!

 

I’m not in the investing business. I don’t give a rip if you invest or not; I’m here to teach you.

But I am getting little sick and tired of the trolls out there bumping around the internet
talking about how stupid Dave Ramsey’s investment advice is when my net worth is tens
of millions of dollars.

So, I must be doing something right other than just selling books. Yeah, I sell a lot of books,
that’s where some of that came from for sure, but most of it came from investing you guys,
in real estate that I paid cash for and in good mutual funds.  Speaking of my books, if you are
serious you should buy one or two because I know hey will sincerely help you solidify many
important financial concepts and in your own mind, for yourself!

See, if you put money in at the bottom of the market when the market was what sixty nine
hundred sixty four hundred whatever it was at the bottom after the crash, the big crash of
2008; do you remember when the world came to an end? If you put money in there and what’s
the dow today? 24,000. What is ah, 6,000:24,000? Is that four times? You think you guys
that are quick with your second-grade math? Is that four times? So if you put in a million
dollars at the bottom what would you have now? 4 Million Dollars.

 

Uh, this is not hard, but the stock market is. See, you’ve got to learn people, you’ve got to
learn what’s really going on out there in the real estate world and in the investing world if
you want to have any money. The CD is not going to get you there. It’s a certificate of
depression. It’s paying less than 1% in most cases. If you got a really good one it’s one
and a half; zippy.

So, get yourself educated.  I don’t care if you are 18 or 80, you are never too young,
or too old to start doing the right thing with your money.

 

At this point on if someone ask you the smartest way to invest in mutual funds, what would
you tell them?  I just wanted to check and see if you have been paying attention.

 

 

Financial Peace to All !

Dave